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Guest Editorial: Retailer defends his supplier's programs

Published September 28, 2018

By Charles Verral

Editor's note: Charles Verral is the owner of Rob & Charlies, a long-standing bike shop in Santa Fe, New Mexico. He wrote this Guest Editorial in response to his employee's comments quoted in a BRAIN story published last week

I was reading Matt Weibe’s excellent article on tariff implications and was somewhat shocked to see a quote from my oldest employee disparaging my favorite brand, Giant, on two conflated issues. (“Buy, buy, buy … famous for frontloading.”)

I guess I should be glad that my employee, who has supervised our buying for over 20 years, is being careful with my money. However, as a business owner, I have a very different perspective.

I appreciate Giant’s thoughtful and prescient actions to protect our emerging e-bike market in difficult times. They have, among other moves, brought merchandise into this country in advance of the tariffs. It is only sensible for them to want to get this inventory out to the public as widely and rapidly as possible. Since they are providing generous credit terms, the amount of risk to a retail store is minimized and the upside is that a bad situation could indeed be turned into better sales.

I feel that this is a one-time smart move and a separate issue from frontloading 

There are some in the retail part of the industry, and indeed in my own store, who have come to disparage that practice, now universal in the bike industry. Once again, I have a different perspective.

I blundered into this industry 45 years ago after a 3,400-mile trip. Almost 40 years ago, I borrowed $4,000 and opened a store with a co-worker after working at four others. Modern bikes and the modern bike shop were being invented, and we were there.

Years ago, bike shops usually sold all their easy inventory through the end of summer and, as winter progressed, would have less and less to sell, especially at full margin, and even less money to restock. Finally, spring would arrive, but the shelves would be bare and only gradually refill as the store clawed back to life.

Now, a new wave of excitement arrives in the fall, with early shipments of the next year’s stuff, all financed by the vendor until summer and produced partially in response to dealer preseason agreements. It is true that buyers may grimace at the sometimes Byzantine and restrictive rules of these commitments, but hey, what are sales reps for, anyway? In most cases, the plans are structured to help shops participate in national sales programs, say of a new product line from an existing bike vendor.

Other emerging trends have enhanced cooperation between us in brick and mortar and our vendors. Manufacturers' controlled and protected pricing, once deemed illegal, has leveled the playing field.

Additionally, because Giant has encouraged us to integrate our inventory information into their website, we often make sales out of our immediate area. No longer does a customer who makes $50 an hour drive 100 miles round trip to the nearby big city to save $50. Instead, we get calls from customers in that city who have found that we are stocking some model or size unavailable there and are happy to drive to us and pay full price.

In sum, my feeling, as a business owner, is that we should all be grateful for dealer agreements, preseason commitments, manufacturers' set prices, and other evolving systems like click-to-brick. The more we integrate our inventory with our vendors’ production, the more assured we are of a place in the distribution plan.

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